Revenues jump in June, biggest month of the year

by Tom Chorneau

(Calif.) June revenues came in a startling 13 percent or $2.3 billion above expectations, generating a total of nearly $20 billion from the state’s three major sources of tax money.

Overall, the state ended the 2017-18 fiscal year with total revenues just under $135.3 billion—which represents $1.5 billion more than estimates made in the revised May budget and $6.8 billion more than legislative leaders and Gov. Jerry Brown had anticipated when they signed last year’s budget in June, 2017.

Income taxes, buoyed by profit-taking on Wall Street, led the way providing a total of $12.5 billion during the month, which was almost $700 million more than estimates.

Corporate taxes in June came in at $3.2 billion—which ran 21 percent or $577 million ahead of expectations.

Sales taxes provided slightly less than $3.2 billion, which was 32 percent or $760 million more than estimates.

Although surprisingly strong, the upswing in June was not entirely unexpected given the economic conditions both in California and nationally.

Beginning with the election of Donald Trump in 2016, the Standard & Poor’s Index is up almost 25 percent, even with the volatile swings during the last few weeks. But for most of 2017, Wall Street investors were reluctant to take profits before Trump and Congressional leaders agreed on a new tax package.

Even after the tax deal was finalized, many big institutions held on to their gains well into 2018.

Collections in April, traditionally the state’s biggest month for personal income tax, were almost $500 million more than expected but still fell short of what some believed would eventually be coming to the state.

Indeed, revenue collections in June may have finally closed that debate.

For the first time in recent memory, June’s total income of $19.9 billion out-paced April’s $18 billion.

According to the non-partisan Legislative Analyst, over half of all state revenue comes during four key months: December, January, April and June.

The 2018-19 budget, signed by Brown late last month, calls for nearly $200 billion in spending—some $139 billion from the general fund and $57 billion from special funds and $3.9 billion in bond debt.

Although Brown continues to warn of the looming threat of recession, a report from the state controller’s office shows that the California economy remains robust:

During the past six years, the California workforce added 2.3 million new jobs—the most of any state in the U.S. during the same period. California’s 14.8 million workers now represent 12 percent of all jobs nationally.

California’s hiring spree equaled a 19 percent growth rate from 2011 to 2017, seventh nationwide and outpacing the average 12 percent hiring pace among other states. (Utah was first by this metric.)

Private employers in California paid an average weekly wage of $1,354 in the fourth quarter of 2017, 26 percent higher than other states. California wages rose 23 percent from 2011 to 2017, the second largest hike nationwide and larger than the 15 percent average growth in other states. (Washington State was number one.)